Chicago Steams Ahead With Rail Industrial Parks

Situated at the epicenter of the U.S. economy, Chicago calls itself the railroad capital of the nation. Travel a mile or two on any route from downtown and you'll encounter a thicket of rail tracks leading in all directions. Expressways criss-cross the metro area, but it was founded on rail, and rail remains a mighty force.

But Chicago's economy is ailing. The vacancy rate of its industrial market's 1 billion sq. ft. of buildings climbed to 9.39% at mid-year, the highest rate since 1994, reports Colliers Bennett & Kahnweiler, a local developer and brokerage. Net absorption in the first half of the year was negative 4.9 million sq. ft., a sharp contrast to the positive absorption of 6.2 million sq. ft. in the first half of 2007. The jobless rate in Illinois stands at 7.3%, the highest level since 1993 and far above the national average of 5.7%.

Despite the ailing economy, the metro area is forging ahead with a bevy of at least six intermodal business parks as the region seals its commitment to rail in the face of mounting fuel costs that have shaken the trucking industry. The new railparks target the biggest logistics enterprises and typically involve warehouses spanning at least 500,000 sq. ft.

“More products are likely to move by rail rather than truck in the future,” says Paige Doehla, vice president of business development at CenterPoint Properties, based in suburban Oak Brook and ranked the largest industrial developer in Chicago for many years. “Railroads are crying out for more modern and less congested logistics parks that offer customers a full range of transport solutions.”

Space shrinks near interchanges

Spec buildings are still rising along older, established corridors such as Interstate 55, which is clustered around the towns of Romeoville and Bolingbrook some 35 miles southwest of Chicago. But space is rapidly becoming scarce around prime tollway interchanges, and with the advent of $4-a-gallon fuel prices, the bets are growing that shippers will turn from trucks to more energy-efficient trains.

CenterPoint kicked off the modern intermodal building binge in 2000 when it acquired a former army arsenal spread over 2,500 acres near the far southwest suburb of Joliet. The company then linked it up to an adjacent Burlington Northern Santa Fe rail line with direct access to big West Coast shipping ports.

Wal-Mart Stores Inc. put up 3.4 million sq. ft. of warehousing, Georgia-Pacific LLC put up 1 million sq. ft. and Bissell Inc., the vacuum maker, recently signed on for a 500,000 sq. ft. build-to-suit. After putting up more than 8 million sq. ft. of warehouses, CenterPoint has only 250 acres left for development.

Just two miles to the north in Joliet — a faded industrial town that lost most of its manufacturing in the 1970s and 1980s — CenterPoint is working on a bigger intermodal center spread over 3,600 acres with a capacity for 20 million sq. ft. of buildings. The company hopes to begin construction next year, with a tie-in to the adjacent Union Pacific Railroad.

That's not all. In 2005, CenterPoint bought a 362-acre industrial park next to a Union Pacific line in Rochelle, 75 miles west of Chicago, when the park was new. It's been slow to attract tenants, but it is strategically located along the Interstate 39 north-south corridor that is evolving as a main artery for regional freight.

CenterPoint also has acquired and zoned 1,000 acres south of Chicago, in the suburb of Crete, for yet another intermodal facility, this one likely to be partnered with the CSX Railroad. It will have capacity for 5 million sq. ft. of warehousing.

“The first intermodal that CenterPoint put up near Joliet was an important event within the industrial Chicago market,” says Leonard Caldeira, managing director of Jones Lang LaSalle. “It set off a whole explosion of interest in rail facilities.”

Other developers are hopping on the bandwagon. A partnership led by Keating Resources in suburban Geneva earlier this year acquired 1,600 acres in the exurb of Seneca, 60 miles southwest of Chicago and 15 miles west of CenterPoint in Joliet. and got zoning approvals recently for a development of 10 million sq. ft. tied to CSX. The value of the investment is forecast to be $150 million ultimately.

“This is a great time to be buying raw land for industrial development beyond Chicago's suburbs,” says Gerard Keating, a principal, who paid $20,000 an acre for his land. Three years ago, when residential subdivision builders were bidding in the area, the same land carried an asking price of $50,000 an acre.

Sources say Chicago's First Industrial Realty Trust is close to a deal for a large industrial site in northwest Indiana, within an hour's drive of Chicago, for yet another intermodal project. While the company hasn't acknowledged that, Rick Czerwinski, national director of leasing and asset management at First Industrial, says, “We expect it will be a major component of our business in the future. We'd love to have one in metro Chicago.”

Too many intermodals?

Chicago already has more than a dozen older, mostly smaller intermodal hubs, but Czerwinski doesn't think railparks are in danger of getting overbuilt. “I don't think we're close to that point yet.”

Kris Bjorson, a managing director at Jones Lang LaSalle in Chicago, recalls when industrial clients “would come to us in years past looking for space and tell us they preferred rail-served sites. Now rail is an outright requirement. And metro Chicago is fairly tight for good rail-served facilities.”

The intermodal projects have risen for many reasons, but one important trend has been key. The Chicago metro market is pushing far beyond its old six-county boundaries to new exurban vistas.

Towns like Rockford, DeKalb, Kankakee, Portage, Ind., and Kenosha, Wis., once considered too remote for distribution to Chicago's 8 million-plus consumers, are now filling up with suburban population spillover and considered strategic centers for distribution.

These distant submarkets offer cheap land and lots of it, often along rail lines. For prospective intermodal developers, that combination has been hard to resist.

But there are some risks involved. Aaron Paris, chairman and CEO of Paris Development LLC in Chicago, who was the developer of the Rochelle intermodal seven years ago when he was with original owner DP Partners of Reno, Nev., says that he's been disappointed with the progress in attracting tenants there.

“Intermodals are great, but I don't think you can put them too far away from populations,” says Paris. The rise of intermodal hasn't prevented developers from putting up big speculative warehouses along highways. The key I-80 market west of Joliet now has seven spec buildings exceeding 500,000 sq. ft. with precious few tenant prospects in sight.

Rosemont-based Opus North Corp. has a 221-acre industrial park in the former farming town of Minooka, 10 miles west of Joliet. Opus sold an 861,000 sq. ft. warehouse there to Macy's a year ago.

The company has just finished work on a new 965,000 sq. ft. spec warehouse, but this time there are no offers from tenants. The asking rent is $2.95 per sq. ft. on a net basis, a price not much different from what industrial space in the outer suburbs was going for a decade ago.

Rents turn aggressive

“It's very competitive here right now,” says Greg Terwilliger, real estate director at Opus North. “Rents have become very aggressive. There was no tenant activity at all over the summer, and now we're seeing just a little uptick in interest. We'll probably have to wait until the [presidential] election is over before companies start making supply chain decisions again.”

Meantime, he and Opus keep building: two spec warehouses — spanning 260,000 sq. ft. and 290,000 sq. ft. — recently broke ground in the in-fill suburb of Cicero, on a former General Electric oven manufacturing site. The asking price there of $5 per sq. ft. net reflects the higher cost of land and environmental clean-up work.

Terwilliger and others are encouraged by the big deals that have been completed along I-80 west of Joliet in recent years. Kellogg Inc. put up a 1.1 million sq. ft. distribution hub in Minooka. Clorox Co. settled in nearby with an 850,000 sq. ft. box and then came Kraft Inc. with 806,000 sq. ft. and BMW with 306,000 sq. ft. that will finish up later this fall.

“We had a great year in 2007 attracting industrial tenants to our area,” boasts Nancy Norton Ammer, CEO of the Grundy Economic Development Council, which includes Minooka. Some analysts predict that the kind of concentrated regional big boxes that have come to Minooka will go out of style as corporations extend supply chains to smaller warehouses spread out geographically, hoping to save on fuel costs for trucks.

Ammer disagrees. “We can offer cheap land and no highway congestion way out here,” she says, noting that Chicago is nearly 50 miles to the northeast. Raw land is available for less than $1 a sq. ft. in Grundy, compared with $3 to $5 to the east in Will County, where traffic is a growing headache. “Trucks can get in and out of warehouses here easily, and they have no highway traffic out here to worry about.”

Others think there may be limits, however. David Bercu, a principal with Colliers Bennett & Kahnweiler, is brokering new spec boxes for Corum Real Estate Group, which will soon deliver a 269,000 sq. ft. building in Bolingbrook, and Duke Realty Corp., which has a new 500,000 sq. ft. box in Aurora.

“As distribution centers over the past decade were consolidated from smaller centers to mega buildings, Chicago benefited,” says Bercu. “But now companies are looking at how expensive it is to run a truck from Chicago to Atlanta. They're deciding maybe they could use a smaller facility part-way, perhaps in Memphis.”

For companies considering sites around Chicago, the economic analyses can get complicated, says Eric Fuglsang, a partner at Chicago law firm Quarles & Brady LLP who advises industrial clients. “The corporation considering a secondary market has to look hard at fuel costs. But many of these secondary cities are also willing to advance incentives to help balance out the fuel costs,” he says.

For the moment, the big deals are still occurring on a spotty basis. Minneapolis-based Ryan Cos. recently sold a 70-acre parcel in its Laraway Crossing Business Park in Joliet off I-80 to Swedish furniture retailer Ikea. The company planned to break ground on a mammoth 1.5 million sq. ft. center last spring, but delayed construction until later next year.

Watching Ikea's delay, deep-pocketed Ryan has grown cautious and is eager to close out its Boldt Park in Romeoville, where 55 acres are left, with a 600,000 sq. ft. spec building. But it's resisted putting shovel to dirt so far.

“The I-55 corridor has more than 2 million sq. ft. in spec space available right now,” notes Tim Hennelly, Ryan's vice president of development. “We don't think the market dictates that we build another spec product now.”

Other companies have been more fearless. Atlanta-based IDI recently completed a 450,000 sq. ft. spec building in Bolingbrook, not far from Boldt Park, and has put up another 51,000 sq. ft. small box in Hanover Park, in DuPage County. The company has put off starting on three other spec projects.

“There is probably a two- or three-year supply of spec product in Chicago right now,” concedes Matt Kurucz, development manager for the Chicago region at IDI. He doesn't expect demand for space to pick up substantially until the third quarter of 2009. “We used to have five or six companies at any one time looking for 1 million feet each. That kind of tenant is very rare right now.”

Some developers, like Pizzuti Cos., based in Columbus, Ohio, are determined to differentiate themselves. Pizzuti finished a spec building of 648,000 sq. ft. in Romeoville astride I-55 in late summer featuring high-diffusion skylights and other energy-saving features. “We can show tenants how they can save 40 cents per foot in energy costs by moving into this building,” says Michael Chivini, executive vice president of Pizzuti.

When railroads and highways aren't enough, proximity to air cargo can be an advantage. In Rockford, 60 miles northwest of Chicago, United Parcel Service has expanded its shipping hub at the city's Chicago Rockford International Airport.

Corporate tenants have come piling into the market, including hardware retailer Lowe's Cos., which moved into a 1.2 million sq. ft. building a year ago, and Kerry Americas, a food distribution company owned by an Irish firm, which is in the process of erecting 220,000 sq. ft. in two buildings.

Par Tolles, president of DP Partners in Reno, worries that Chicago's industrial market overall is falling behind other markets. The company owns business parks in New Jersey, Las Vegas, Los Angeles and other places. A 496,000 sq. ft. spec building erected by DP in the south suburb of Sauk Village, available since May, has attracted a trickle of tenant prospects.

“Our developments in New Jersey and Savannah, Ga., are leasing up now. Their operations are close to normal,” Tolles says. “For whatever reason, Chicago has been slower.”

The Sauk Village DP building is near the future site of CenterPoint's Crete intermodal railpark and close to the site of a proposed third major Chicago area airport. “The airport might not ever get built, and the intermodal could be years away, too,” says Tolles. “But if the intermodal is built, it would be icing on the cake for us. We'd love to see it happen.”

So would many other Chicago developers. The city has grown and prospered as a crossroads for rail traffic. In the future, there is a growing realization that it will be the railroads that will get the local industrial market humming with activity again.

H. Lee Murphy is a Chicago-based writer.

CHICAGO - BY THE NUMBERS

LARGEST PRIVATE EMPLOYERS

Jewel-Osco supermarkets35,500 employees

Advocate Health Care28,000 employees

United Parcel Service of America21,000 employees Source: NREI estimates

METRO POPULATION: 8.4 million

Source: U.S. Census Bureau

UNEMPLOYMENT RATE: 7.5%

Source: Illinois Department of Employment Security

METRO AREA VITAL SIGNS

Office:

16.9% vacancy, 2Q 2008

16.9% vacancy, 2Q 2007

$32.81 rent per sq. ft., 2Q 2008

$31.42 rent per sq. ft., 2Q 2007

Source: Grubb & Ellis Co.

Multifamily:

8.4% vacancy, 2Q 2008

4.6% vacancy, 2Q 2007

$2.39 average rent per sq. ft, 2Q 2008

$2.30 average rent per sq. ft. 2Q 2007

Source: Appraisal Research Counselors

Retail:

8.6% vacancy, 2Q 2008

7.5% vacancy, 2Q 2007

$23.53 rent per sq. ft., 2Q 2008

$22.72 rent per sq. ft., 2Q 2007

Source: Reis

Industrial:

9.4% vacancy, 2Q 2008

8.3% vacancy, 2Q 2007

$4.58 rent per sq. ft., 2Q 2008

$4.31 rent per sq. ft., 2Q 2007

Source: Grubb & Ellis

Hotel:

70.9% occupancy, 2Q 2008

73.8% occupancy, 2Q 2007

$199.22 average daily rate, 2Q 2008

$190.25 average daily rate, 2Q 2007

Source: Smith Travel Research

MAJOR PROJECTS

Chicago Spire: Marketing has started in the U.S. and overseas for the corkscrew-shaped 2,000-ft. tower designed by Spanish architect Santiago Calatrava on the near north side of the city. There will ultimately be 1,300 condominium units spread over 2.5 million sq. ft., with prices topping $1,200 per ft. The new building is expected to dwarf the Sears Tower, which rises 1,730 ft. The spire also is expected to be the tallest building in North America when it is completed.

Developer: Shelbourne Development Ltd.

Completion: 2011, unofficial estimate

Cost: $1.5 billion, unofficial estimate

River Point: A 50-story office tower planned at 201 N. Canal St. in the West Loop neighborhood spanning 1.1 million sq. ft. Investment firm William Blair & Co. signed on as the lead tenant, taking 325,000 sq. ft. The high-rise will overlook the Chicago River.

Developer: Hines Interests, L.P. with minority partners

Completion: Summer 2011

Cost: $400 million

“This is a great time to be buying raw land for industrial development beyond Chicago's suburbs,” says Gerard Keating, a principal, who paid $20,000 an acre for his land. Three years ago, when residential subdivision builders were bidding in the area, the same land carried an asking price of $50,000 an acre.

Sources say Chicago's First Industrial Realty Trust is close to a deal for a large industrial site in northwest Indiana, within an hour's drive of Chicago, for yet another intermodal project. While the company hasn't acknowledged that, Rick Czerwinski, national director of leasing and asset management at First Industrial, says, “We expect it will be a major component of our business in the future. We'd love to have one in metro Chicago.”

Too many intermodals?

Chicago already has more than a dozen older, mostly smaller intermodal hubs, but Czerwinski doesn't think railparks are in danger of getting overbuilt. “I don't think we're close to that point yet.”

Kris Bjorson, a managing director at Jones Lang LaSalle in Chicago, recalls when industrial clients “would come to us in years past looking for space and tell us they preferred rail-served sites. Now rail is an outright requirement. And metro Chicago is fairly tight for good rail-served facilities.”

The intermodal projects have risen for many reasons, but one important trend has been key. The Chicago metro market is pushing far beyond its old six-county boundaries to new exurban vistas.

Towns like Rockford, DeKalb, Kankakee, Portage, Ind., and Kenosha, Wis., once considered too remote for distribution to Chicago's 8 million-plus consumers, are now filling up with suburban population spillover and considered strategic centers for distribution.

These distant submarkets offer cheap land and lots of it, often along rail lines. For prospective intermodal developers, that combination has been hard to resist.

But there are some risks involved. Aaron Paris, chairman and CEO of Paris Development LLC in Chicago, who was the developer of the Rochelle intermodal seven years ago when he was with original owner DP Partners of Reno, Nev., says that he's been disappointed with the progress in attracting tenants there.

“Intermodals are great, but I don't think you can put them too far away from populations,” says Paris. The rise of intermodal hasn't prevented developers from putting up big speculative warehouses along highways. The key I-80 market west of Joliet now has seven spec buildings exceeding 500,000 sq. ft. with precious few tenant prospects in sight.

Rosemont-based Opus North Corp. has a 221-acre industrial park in the former farming town of Minooka, 10 miles west of Joliet. Opus sold an 861,000 sq. ft. warehouse there to Macy's a year ago.

The company has just finished work on a new 965,000 sq. ft. spec warehouse, but this time there are no offers from tenants. The asking rent is $2.95 per sq. ft. on a net basis, a price not much different from what industrial space in the outer suburbs was going for a decade ago.

Rents turn aggressive

“It's very competitive here right now,” says Greg Terwilliger, real estate director at Opus North. “Rents have become very aggressive. There was no tenant activity at all over the summer, and now we're seeing just a little uptick in interest. We'll probably have to wait until the [presidential] election is over before companies start making supply chain decisions again.”

Meantime, he and Opus keep building: two spec warehouses — spanning 260,000 sq. ft. and 290,000 sq. ft. — recently broke ground in the in-fill suburb of Cicero, on a former General Electric oven manufacturing site. The asking price there of $5 per sq. ft. net reflects the higher cost of land and environmental clean-up work.

Terwilliger and others are encouraged by the big deals that have been completed along I-80 west of Joliet in recent years. Kellogg Inc. put up a 1.1 million sq. ft. distribution hub in Minooka. Clorox Co. settled in nearby with an 850,000 sq. ft. box and then came Kraft Inc. with 806,000 sq. ft. and BMW with 306,000 sq. ft. that will finish up later this fall.

“We had a great year in 2007 attracting industrial tenants to our area,” boasts Nancy Norton Ammer, CEO of the Grundy Economic Development Council, which includes Minooka. Some analysts predict that the kind of concentrated regional big boxes that have come to Minooka will go out of style as corporations extend supply chains to smaller warehouses spread out geographically, hoping to save on fuel costs for trucks.

Ammer disagrees. “We can offer cheap land and no highway congestion way out here,” she says, noting that Chicago is nearly 50 miles to the northeast. Raw land is available for less than $1 a sq. ft. in Grundy, compared with $3 to $5 to the east in Will County, where traffic is a growing headache. “Trucks can get in and out of warehouses here easily, and they have no highway traffic out here to worry about.”

Others think there may be limits, however. David Bercu, a principal with Colliers Bennett & Kahnweiler, is brokering new spec boxes for Corum Real Estate Group, which will soon deliver a 269,000 sq. ft. building in Bolingbrook, and Duke Realty Corp., which has a new 500,000 sq. ft. box in Aurora.

“As distribution centers over the past decade were consolidated from smaller centers to mega buildings, Chicago benefited,” says Bercu. “But now companies are looking at how expensive it is to run a truck from Chicago to Atlanta. They're deciding maybe they could use a smaller facility part-way, perhaps in Memphis.”

For companies considering sites around Chicago, the economic analyses can get complicated, says Eric Fuglsang, a partner at Chicago law firm Quarles & Brady LLP who advises industrial clients. “The corporation considering a secondary market has to look hard at fuel costs. But many of these secondary cities are also willing to advance incentives to help balance out the fuel costs,” he says.

For the moment, the big deals are still occurring on a spotty basis. Minneapolis-based Ryan Cos. recently sold a 70-acre parcel in its Laraway Crossing Business Park in Joliet off I-80 to Swedish furniture retailer Ikea. The company planned to break ground on a mammoth 1.5 million sq. ft. center last spring, but delayed construction until later next year.

Watching Ikea's delay, deep-pocketed Ryan has grown cautious and is eager to close out its Boldt Park in Romeoville, where 55 acres are left, with a 600,000 sq. ft. spec building. But it's resisted putting shovel to dirt so far.

“The I-55 corridor has more than 2 million sq. ft. in spec space available right now,” notes Tim Hennelly, Ryan's vice president of development. “We don't think the market dictates that we build another spec product now.”

Other companies have been more fearless. Atlanta-based IDI recently completed a 450,000 sq. ft. spec building in Bolingbrook, not far from Boldt Park, and has put up another 51,000 sq. ft. small box in Hanover Park, in DuPage County. The company has put off starting on three other spec projects.

“There is probably a two- or three-year supply of spec product in Chicago right now,” concedes Matt Kurucz, development manager for the Chicago region at IDI. He doesn't expect demand for space to pick up substantially until the third quarter of 2009. “We used to have five or six companies at any one time looking for 1 million feet each. That kind of tenant is very rare right now.”

Some developers, like Pizzuti Cos., based in Columbus, Ohio, are determined to differentiate themselves. Pizzuti finished a spec building of 648,000 sq. ft. in Romeoville astride I-55 in late summer featuring high-diffusion skylights and other energy-saving features. “We can show tenants how they can save 40 cents per foot in energy costs by moving into this building,” says Michael Chivini, executive vice president of Pizzuti.

When railroads and highways aren't enough, proximity to air cargo can be an advantage. In Rockford, 60 miles northwest of Chicago, United Parcel Service has expanded its shipping hub at the city's Chicago Rockford International Airport.

Corporate tenants have come piling into the market, including hardware retailer Lowe's Cos., which moved into a 1.2 million sq. ft. building a year ago, and Kerry Americas, a food distribution company owned by an Irish firm, which is in the process of erecting 220,000 sq. ft. in two buildings.

Par Tolles, president of DP Partners in Reno, worries that Chicago's industrial market overall is falling behind other markets. The company owns business parks in New Jersey, Las Vegas, Los Angeles and other places. A 496,000 sq. ft. spec building erected by DP in the south suburb of Sauk Village, available since May, has attracted a trickle of tenant prospects.

“Our developments in New Jersey and Savannah, Ga., are leasing up now. Their operations are close to normal,” Tolles says. “For whatever reason, Chicago has been slower.”

The Sauk Village DP building is near the future site of CenterPoint's Crete intermodal railpark and close to the site of a proposed third major Chicago area airport. “The airport might not ever get built, and the intermodal could be years away, too,” says Tolles. “But if the intermodal is built, it would be icing on the cake for us. We'd love to see it happen.”

So would many other Chicago developers. The city has grown and prospered as a crossroads for rail traffic. In the future, there is a growing realization that it will be the railroads that will get the local industrial market humming with activity again.

H. Lee Murphy is a Chicago-based writer.

CHICAGO - BY THE NUMBERS

LARGEST PRIVATE EMPLOYERS

Jewel-Osco supermarkets35,500 employees

Advocate Health Care28,000 employees

United Parcel Service of America21,000 employees Source: NREI estimates

METRO POPULATION: 8.4 million

Source: U.S. Census Bureau

UNEMPLOYMENT RATE: 7.5%

Source: Illinois Department of Employment Security

METRO AREA VITAL SIGNS

Office:

16.9% vacancy, 2Q 2008

16.9% vacancy, 2Q 2007

$32.81 rent per sq. ft., 2Q 2008

$31.42 rent per sq. ft., 2Q 2007

Source: Grubb & Ellis Co.

Multifamily:

8.4% vacancy, 2Q 2008

4.6% vacancy, 2Q 2007

$2.39 average rent per sq. ft, 2Q 2008

$2.30 average rent per sq. ft. 2Q 2007

Source: Appraisal Research Counselors

Retail:

8.6% vacancy, 2Q 2008

7.5% vacancy, 2Q 2007

$23.53 rent per sq. ft., 2Q 2008

$22.72 rent per sq. ft., 2Q 2007

Source: Reis

Industrial:

9.4% vacancy, 2Q 2008

8.3% vacancy, 2Q 2007

$4.58 rent per sq. ft., 2Q 2008

$4.31 rent per sq. ft., 2Q 2007

Source: Grubb & Ellis

Hotel:

70.9% occupancy, 2Q 2008

73.8% occupancy, 2Q 2007

$199.22 average daily rate, 2Q 2008

$190.25 average daily rate, 2Q 2007

Source: Smith Travel Research

MAJOR PROJECTS

Chicago Spire: Marketing has started in the U.S. and overseas for the corkscrew-shaped 2,000-ft. tower designed by Spanish architect Santiago Calatrava on the near north side of the city. There will ultimately be 1,300 condominium units spread over 2.5 million sq. ft., with prices topping $1,200 per ft. The new building is expected to dwarf the Sears Tower, which rises 1,730 ft. The spire also is expected to be the tallest building in North America when it is completed.

Developer: Shelbourne Development Ltd.

Completion: 2011, unofficial estimate

Cost: $1.5 billion, unofficial estimate

River Point: A 50-story office tower planned at 201 N. Canal St. in the West Loop neighborhood spanning 1.1 million sq. ft. Investment firm William Blair & Co. signed on as the lead tenant, taking 325,000 sq. ft. The high-rise will overlook the Chicago River.